Sky-high home prices that continue to increase against all laws of physics along with high rental rates and unfavorable unemployment rates have not been enough to chase millennials completely away from some of these hipster havens, but there are signs that may be changing.
Most of these established and consequently unaffordable havens for hipsters — the most easily definable cultural subset of millennials — are on the coasts: counties in San Francisco, New York City, Los Angeles, San Diego, Portland, Seattle and Washington, D.C. made one or both of the least affordable lists, according to a RealtyTrac analysis: 15 Least affordable markets for millennials to buy, and 15 least affordable markets for millennials to rent (see full methodology below).
There were some exceptions to the move toward the coasts, most notably Denver County, which made the Top 15 least affordable markets to buy list. In Denver County and many of the other least affordable counties to buy and rent, the number of millennials has increased dramatically over the past six years despite the lowering affordability situation. The millennial population in Denver County increased 58 percent between 2007 and 2013, and was up 68 percent in San Francisco County and 81 percent in Alexandria City in the Washington, D.C. metro area during the same time period. Other markets on the least affordable lists where the millennial population increased more than 33 percent between 2007 and 2013 included New York County, N.Y. (Manhattan), Multnomah County, Ore. (Portland), and King County, Wash. (Seattle).
But some of these least affordable counties saw tepid growth in the millennial population. In Los Angeles County, the demographic increased less than 5 percent over the past six years, while in Bronx County, N.Y. it was up just 3 percent.
Poor affordability combined with lukewarm job prospects could slow millennial growth in more of these traditional millennial meccas over the next six years. Median home prices in the 15 Least Affordable Markets to Buy averaged $462,588 in April 2014, 150 percent higher than the $185,676 average of all counties with a population over 100,000.
Meanwhile the average fair market rent for a three-bedroom property in the 15 Least Affordable Markets to Rent was $1,723, 35 percent higher than the average of $1,273 for all counties with a population of 100,000 or more.
The average April 2014 unemployment rate was 6.1 percent among the 15 counties least affordable to buy, and was 6.6 percent in the 15 counties least affordable to rent — both above the average 5.9 percent unemployment rate in the 351 counties with a population of 100,000 or more.
RealtyTrac analyzed the percentage of income needed by median income earners to purchase a median priced home or rent an average three-bedroom property in the 351 U.S. counties with a population of 100,000 or more to identify which were most affordable. To narrow the list down to only counties attractive to millennials, RealtyTrac only considered counties where millennials — defined as those born between 1977 and 1992 — made up at least 24 percent of the total population, and where the millennial population increased between 2007 and 2013.
After this filtering, RealtyTrac sorted the list by percentage of income spent on the housing payment — including mortgage, insurance, taxes and maintenance — and the percentage of income spent on the average rent for a 3-bedroom home as assigned the U.S. Department of Housing and Urban Development, and took the 15 counties with the highest percentages in each sort to determine 15 Least Affordable Markets for Buying and 15 Least Affordable Markets for Renting.